Shake-up looming in Latvian election

PM Māris Kučinskis faces a populist challenge in the October 6 general election.

By Wojciech Kosc in WarsawOctober 5, 2018

The Latvian political landscape might be in for a thorough shake-up on October 6 when Latvians head to the polling stations to vote on the next government.

The incumbent patchwork coalition of the liberal Unity party with agrarians from the Union of Greens and Farmers and the right-wing National Alliance has never been a strong set-up, and now appears as vulnerable as ever.

The ruling parties are facing up to the rise of populist and anti-establishment KPV – whose name translates as “Who owns the state?” – that is seen as willing to cross the long-time red line of Latvian politics.

The red line is teaming up with Latvia’s largest and most popular party Harmony, which has long been isolated from power – other than on the municipal level in the capital Riga – because of its alleged closeness to Russia.

Russia is a big factor in Latvian politics, not just because it is a neighbouring country and an important trade partner. Around a quarter of the Latvian population are ethnic Russians with long-time grievances about discrimination to which the current administration unfortunately added.

Latvia has also been uptight about Russia as a frontline Nato country in the region that is seen a potential geopolitical hotspot. Russia’s renewed military and political posturing is re-awakening fears of Moscow's domination, which Latvia endured until the early 1990s.

KPV, which is launching Trump-style attacks on all other parties and their leaders, is seen as a potential coalition partner to Harmony.

For its part, Harmony has also undergone a revamp to reduce the weight of accusations of being a Russian agent. The party ended cooperation with Putin’s United Russia and joined the Socialists and Democrats in the European Parliament.

Recent polls suggest Harmony will win most votes comfortably. The party is at around 17%-20% in recent surveys with the incumbent government coalition parties and populists from KPV behind, each at around 10%.

The New Conservative Party and the For Development movement, the two parties created in effect of crises plaguing Unity, are also in the race.

The vote is taking place against the backdrop of an economy having recovered from the financial crisis a decade ago. GDP grew adjusted 4.4% y/y in the second quarter while unemployment has been on the decline, dropping to 7.7%. At the same time, wages expanded 8.4% y/y in April-June.

Apparently, the good economy will not be enough to ensure another term in office of the current government.

“Voters are tired of hard work, which was necessary to pull Latvia out of the economic crisis. Now, when the economic turmoil is finally over and the country is back on track economically, voters want new faces: the current ministers cannot offer anything entertaining," political scientist Filips Rajevskis told AFP.

"That's where the populism kicks in,” he added.

The unpredictable could happen as well. With so many parties competing for voters and a whopping 25% of the electorate still unsure who they will support, the ultimate outcome of the election could differ wildly from any analyses.

The board of Ukraine’s main donor, the International Monetary Fund (IMF) signed off on the badly needed $3.9bn Stand by agreement (SBA) at a meeting on December 18.

Average bribe in Russia is estimated by the Public Prosecution Service at RUB609,000 ($9,000), while the total amount of uncovered bribes in January-September 2018 stood at RUB1.8bn ($26.7mn), as reported by Vedomosti daily.

Analysts think country is undergoing a much harder landing than many people expected. Credit crunch seen morphing from complete shutdown in FX-denominated lending to suppression of TRY lending.

Russia's e-commerce market in 2018 could reach RUB1.5 trillion ($22.8bn), according to the estimates by Data Insight cited by Vedomosti daily on December 17. Sales in Russian online stores are expected to increase by 19% to RUB1.15 trillion

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